'Project Natal' Won't Be Released Early: Microsoft Chief

Chris Morris|Special to CNBC.com

Thursday, 4 Jun 2009 | 10:29 AM ETCNBC.com

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Photo Source:Jake Metcalf

Project Natal Stage

While Microsoft is still riding a wave of goodwill after its unveiling of “Project Natal” to consumers, the company says it does not plan to rush the technology — and is willing to wait as long as necessary before putting the new gaming control system on store shelves.

While tech demos of the product are working smoothly, Shane Kim, corporate vice president of strategy and business development for Microsoft, says “Natal” will not launch until the company and its publishing partners are convinced there is sufficient software built around it — no matter how long that takes.

“We have a lot to do on the hardware and software itself, but we won’t ship it until we’re confident we have a minimum number of incredible experiences with it,” says Kim. “We’d love for that to be as soon as possible. But we’re not going to ship it too early.”

“Project Natal,” a motion sensor that allows users to control onscreen action without the use of a controller, is a lynchpin in Microsoft’s strategy of extending the life of the Xbox 360.

The device is an enormous investment for Microsoft . It is, in essence, the company’s next generation system — only it will not require consumers to buy a new hardware system.

Kim says he believes the potential advances of Natal could extend the Xbox 360’s life cycle to 2015, which is four years (or more) later than most industry observers were predicting.

Courtesy Image

Microsoft's Shane Kim

“We think ‘Natal’ is a big part of the future for us,” he says.

While Microsoft and third-party publishers are already working on ways to incorporate the motion sensing technology into new games, the team behind the product has shown it is possible to retrofit existing games as well.

Among the tech demos for “Natal” at the ongoing Electronic Entertainment Expo, is a retrofitted version of “Burnout: Paradise,” which allows players to drive a car in an intuitive and entertaining fashion.

Of course, “Project Natal” may never have come to life if the Wii had not proven to be a runaway success. Even Kim acknowledges this.

“Nintendo has obviously touched the hearts with a lot of consumers,” he says. “We learned from that that the thing we didn’t want to do was do something that was derivative. We wanted to go far beyond that.”

Another part of the company’s plan to extend the 360’s life cycle was unveiled last year, with an overhaul of the game system’s operating system. The “New Xbox Experience” (NXE) ushered in Netflix rentals via the 360, online game shows that pitted themselves against network television programming and a new way to explore Xbox Live’s retail (and other) offerings.

Since the launch of the NXE, Kim says Xbox Live has added 500,000 consumers per month.

Monday’s launch of the “1 vs. 100” beta (which was part of that launch, though belatedly) in the United States gathered 50,000 players together simultaneously.

“We are blurring the lines between television and video game entertainment with ‘1 vs. 100’,” says Kim.

Ultimately, of course, it’s games that drive sales of the Xbox 360 — and this holiday season sees a potential blockbusters in “Halo 3:ODST.” The game represents a new step for the series, in that it is a prequel that is an action game that does not feature the Master Chief, the hero of the first three installments.

More intriguing, perhaps, is “Halo: Reach,” a new Bungie software title that is designed as a prequel to the games’ original trilogy.

While Kim declines to give further details about the title at this point, he does point out that the Master Chief played a role in the “Fall of the Reach” book, indicating the hero of the original series could be returning next year.

Any new “Halo” title could help sales as the market for video game hardware becomes more competitive, though.

The Xbox 360 is currently the least expensive current generation gaming system on the market. But with Sony expected to cut prices in the coming months and increasing pressure on Nintendo to follow suit, Microsoft could see its competition increase.

Kim, though, says the company is prepared for any imminent price cuts.

“We expect Sony will have to reduce prices at some point,” he says. “Whether it’s this fall or earlier, we’re prepared for it. We don’t believe it will have a long-term impact on the 360’s performance.”